Will Brooklyn Lose The Nets To Russia?

Russian billionaire and Brooklyn Nets owner Mikhail Prokhorov has announced plans to transfer ownership of the basketball team to one of his Russian companies, but it's unclear whether or not the NBA will allow it. (Kathy Kmonicek/AP Photo)

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Russian billionaire Mikhail Prokhorov’s plans to transfer the Brooklyn Nets to one of his Russian companies may never happen.

The move, which would be the first of its kind in U.S. professional sports, can not take place without the approval of the National Basketball Association. It’s unclear whether the NBA would let such a change happen.

Prokhorov’s proposed ownership transfer would be in keeping with Russian President Vladimir Putin’s call for businesses to be registered and pay taxes in Russia. There’s also a ban on politicians having foreign accounts and equity.

UNIDENTIFIED MAN: A third straight overtime game for the Nets. They're now 1-2 in those games as Charlotte takes it by five.

PFEIFFER: The Brooklyn Nets' loss Wednesday night to the Charlotte Bobcats puts them in third place in the race for the season's Atlantic Division basketball title. But the Nets have been making headlines off the court with other news. Earlier this week, the team's Russian billionaire owner, Mikhail Prokhorov, said he wants to transfer ownership of the Nets to one of his Russian companies. But that company is now backtracking on the news. Scott Soshnick has been following this story for Bloomberg News, and he joins us now from New York to discuss. Hi, Scott.

SCOTT SOSHNICK: Hello there.

PFEIFFER: And Scott, would you first tell us about Mikhail Prokhorov and why he would want to make the Nets a Russian-based company, especially since he's already its owner?

SOSHNICK: Sure. Because he wants to keep President Putin happy. It was a directive from Putin that said anybody either holding office or seeking office - and let's remember that Prokhorov did run for president, and there's some talk about mayor of Moscow as well - that anybody who seeks to hold these positions ought to have all of his business dealings based in Russia so that the tax revenue goes to Russia and not somewhere else. Obviously it's a high-profile business, an NBA team. So Prokhorov, seeking to keep Putin happy, said this is something I at least have to consider, and broached the subject with the league before.

PFEIFFER: Now, we had heard that reports on this had been trickling out since last spring, which predated Putin's call. So he had a sense that this might be happening and he was preparing?

SOSHNICK: Well, surely he and Putin discuss matters of business that don't become public. But he had been looking to repatriate the Nets. There were preliminary discussions with the NBA last spring. I actually sent an email to David Stern, who stepped down as commissioner in February, and said, well, did this really happen? Did it reach your level? And his answer was great: I'm not touching that.

So he left the headache for what this might be for the new commissioner, Adam Silver. But where the problem came in is where Putin - I'm sorry - where Prokhorov said that this doesn't violate rules, and that the NBA had blessed the move already. And then the NBA came out and said, well, that's not exactly what happened. We had some discussions, yes, but we certainly didn't bless or give our approval for such a move because no application has even been received.

PFEIFFER: And how does the NBA in general feel about this? Because there actually is precedent for this, right? The Toronto Raptors are not U.S.-owned. They're part of the league.

SOSHNICK: Yeah. And the team did have - the league did have a team in Vancouver as well years ago, moved to Memphis, so there was plenty of due diligence done on labor law in Canada. And at the center of all this is the league's question of, if a team is not based in the U.S. and governed by U.S. law, does the league have a problem in governing that franchise? Can they protect the other teams if one club seems to be out of their reach? So they determined that Canadian law was no problem, that the way it's all set up, it's fine. They could still protect the other clubs. If it goes to Russia, they're still not sure they have to do the same due diligence.

PFEIFFER: Now, we had heard in terms of other complications this might cause the NBA - I know there's been sort of talk that there's a Russian player on the team apparently paid less than it seemed that he should be. And there's a suspicion that there's a side deal going on in Russia. So does the NBA kind of lose control in a sense of - lose some control if this ends up being a Russian-based company?

SOSHNICK: Oh, well - well, that's what they're trying to determine. But you're talking about Andrei Kirilenko, a Russian player, and it seemed at the start of the year that his deal with the Nets was for below what seemed to be his market value. So there was some speculation that perhaps Prokhorov had cut some deal with him for after his career, some business in Russia. But that goes on with owners. I mean these guys are billionaires and they own publicly traded companies, privately held companies. That can be between any owner and player, not just a Russian player.

PFEIFFER: So a complicated situation. A lot for the league and the lawyers to work out.